Central Asia Regional Economic Cooperation (CAREC)

Program

CAREC Secretariat

Asian Development Bank

9 March 2011

1

• Overview of CAREC

• Sectoral overview: Transport and Trade facilitation

• Sectoral overview: Energy

• Other Initiatives

• CAREC Program in 2010-2011

Scope of Presentation

2

Overview of CAREC

3

• Partnership

− Member Countries: AFG, AZE, PRC, KAZ, KGZ, MON, PAK, TAJ, TKM, UZB

− Multilateral Institution (MI) Partners: ADB, IMF, WB, EBRD, IsDB, UNDP

− Informal arrangement but a serious commitment by all

− Strong MI collaboration, but ownership by countries

• Action-oriented and Pragmatic approach

− Based on clear strategies and action plans− Covers both hard and soft aspects of

cooperation− Invests in transport, energy, and trade

facilitation− Promotes capacity development and networking

What is CAREC?

4

Good Neighbors, Good Partners, Good Prospects

Vision

Goal

Development through cooperation, leading to

accelerated economic growth and poverty reduction

5

CAREC Strategies and Action Plans

• CAREC Comprehensive Action Plan

− Endorsed in 2006 at the 5th

CAREC Ministerial Conference (MC) in PRC

• Transport and Trade Facilitation Strategy and Action Plan

− Strategy endorsed in 2007 at the 6th

MC in TAJ & Action Plan in 2008 at 7th

MC in AZE

• Trade Policy Strategic Action Plan

− Endorsed in 2008 at 7th

MC in AZE

• Energy Strategy and Action Plan

− Strategy endorsed in 2008 at the 7th

MC in AZE & Action Plan in 2009 at 8th

MC in MON

6

Approved CAREC-related Projects (as of Feb 2011; in US$

million)

7

  Funding Source  

Sector ADB EBRD IsDB WB GovtsOther

s Total

Transport

3,480 615

625

4,039

2,584

741

12,084

Trade Facilitation

48

-

14

107

49

1

219

Energy

1,028 348

247

286

386

448

2,743

Total

4,556 963

886

4,431

3,019

1,189

15,046

Overall Institutional Framework (OIF)

OIF supports:

• Broad-based dialogue and consensus building

• Identification and prioritization of regional cooperation initiatives

• Mobilization of financial and technical resources

8

Overall Institutional Framework (OIF)

• Ministerial Conference (MC)

− Provides overall guidance to the CAREC Program and determines policy and strategic directions and goals.

• Senior Officials’ Meeting (SOM)

− Ensure the effective implementation of the policy decisions made by the Ministerial Conference.

− Its main responsibilities include:

(i) reviewing and articulating issues that emerge from the operational level and making relevant

recommendations to the Ministers

(ii) preparing for the Ministerial Conference

• Sector Committees

− Lead the program in four priority areas, Transport, Trade Facilitation, Trade Policy and Energy

− These committees feed their outputs to the SOM and the MC.

• CAREC Secretariat - ADB

9

Role of NFPs and Sector Focal Points

• National Focal Points (NFPs)

Ensure effective coordination (i) among concerned agencies and other interested parties

in matters related to regional economic cooperation; and (ii) between the government and

the CAREC secretariat.

• Sector Focal Points

Act as focal points for the relevant sector works in the CAREC Program in close

coordination with the NFPs and other concerned parties in the countries.

10

11

CAREC Results Framework

DESIRED LONG-TERM IMPACT OF CAREC PROGRAM

'Accelerated economic growth and poverty reduction'

DESIRED LONG-TERM IMPACT OF CAREC PROGRAM

'Accelerated economic growth and poverty reduction'

Level 1: CAREC COUNTRIES' DEVELOPMENT OUTCOMESLevel 1: CAREC COUNTRIES' DEVELOPMENT OUTCOMES

Level 2: CAREC PRIORITY SECTOR

OUTPUTS

Level 2: CAREC PRIORITY SECTOR

OUTPUTS

Level 3: OPERATIONAL AND ORGANIZATIONAL EFECTIVENESSLevel 3: OPERATIONAL AND ORGANIZATIONAL EFECTIVENESS

Aggregated data for macro-level indicators in:

• Poverty Reduction

• GDP, Trade and Business Environment

Aggregated data for sectoral level indicators in:

• Transport Sector •Trade Policy Sector

• Trade Facilitation Sector •Energy Sector

Aggregated data for input level indicators in:

• Operations Growth •Knowledge Management

•Finance Mobilization

Central Asia Regional Economic Results Framework

Results Framework Schedule

MINISTERIAL CONFERENCE

SENIOR OFFICIALS’

MEETING (SPRING)

31 January

Data Submission

Sector Coordinating Committees and CAREC Secretariat identify mechanisms to address

the actions, and update work plans.

SENIOR OFFICIALS’

MEETING (FALL)

CAREC RESULTS FRAMEWORK

Quarter 1

Quarter 2Quarter 3

Quarter 4

Sectoral OverviewTransport and Trade

Facilitation

13

East Asia Middle East

1995 = $57 billion

2008 = $454 billion

EU South Asia

1995 = $34 billion

2008 =$117 billion

East Asia EU

1995 = $244 billion

2008 = $795 billion

CAREC—A Silk Route to Markets

Transport and Trade Facilitation: Strategic Priorities

• Upgrade the 6 transport corridors

1. Europe – East Asia Corridor 4. Russian Federation – East

Asia

2. Mediterranean – East Asia 5. East Asia – Middle East and South

Asia

3. Russian Federation – Middle 6. Europe – Middle East and

East and South Asia South Asia

• Develop safe, people-friendly transport systems

• Ensure efficient movement of goods and people

−simplify and harmonize regulations that govern cross- border trade

15

16

Heading

17

• Text• Text

HeadingEurope-East Asia Corridor

18

• Text• Text

HeadingMediterranean-East Asia Corridor

19

• Text• Text

HeadingRussia-Middle East-South Asia

Corridor

20

• Text• Text

HeadingRussia-East Asia Corridor

21

• Text• Text

HeadingEast Asia-Middle East, South Asia Corridor

22

• Text• Text

HeadingEurope-Middle East, South Asia Corridor

• Improved the corridor network

−Embarked on 65 projects worth over USD10 billion

−32% of road and rail corridors completed (as of 10/2010)

• Promoted customs cooperation and transit

− Capacity building and investments on customs reforms

− Customs modernization, adoption of risk management and post-entry audit, and joint

customs control started

− Safe packet systems in KAZ and KGZ in place

− Cross-border transport agreement signed by KGZ and TAJ for CAREC Corridor 5

• Carried out integrated trade facilitation

− Regional association of freight forwarders established

− Corridor performance being monitored and measured

− Single window systems being adopted

Key Achievements in TTF

23

• Key elements

− Enables and makes easy international road transport along CAREC corridor

o Allows entry of vehicles registered in the other country

o Mutually recognizes driving licenses, transport operators’ license, and third-party motor

vehicle liability insurance

o Exempts goods, vehicles and containers in transit from customs formalities

− Harmonizes design and construction standards of roads, bridges, road signs and signals,

and road safety and border crossing infrastructure and equipment

− Facilitates border crossing formalities

o Promotes one-stop, single-window clearance; advance exchange of information; risk

management/post-entry audit

o Synchronizes border crossing point operating hours

o Harmonizes cross-border trade documents

Cross-Border Transport Agreement

24

• Accelerate infrastructure investment

• Improve border infrastructure and facilities

− Hard and soft aspects of border crossing points improvement

• Promote Cross Border Transport Agreement

− Accession by other CAREC Countries

− Follow-up activities for effective implementation

• Develop capacities

− Establishment of efficient management systems and associated capacity building

− framework to rationalize sustainable skills development

Future Directions of TTF (1)

25

• Maintain momentum of new institutions

− National Joint Committees, CAREC Federation of Carrier and Forwarder Associations

• Address new areas

− Sanitary/phyto-sanitary inspection;

− Movement of people (particularly business people)

• Optimize use of Corridor Performance Measurement and Monitoring (CPMM)

results

− corridor analyses plus country level & project analyses

− targeted work plan to tackle weakest link on corridors and worst bottlenecks at border crossing

points

Future Directions of TTF (2)

26

Sectoral OverviewEnergy

27

28

5,400

5

2

68

82

2,700

5

5

2,610

1,674

16,000

580

507

0

2,851

24,100

590

514

2,678

4,607

Kazakhstan

The Kyrgyz

TajikistanTurkmenistan

Uzbekistan

Coal MTOE

Gas MTOE

Crude Oil MTOE

Legend

27

163

317

2

15

Hydro Potential TWh/year

Source: World Bank

Republic

Republic

CAREC Energy Sector Strategy

Long-Term Vision• Ensure energy security• Enhance economic growth through energy trade

Strategic Elements• Domestic and cross-border investments• Capacity Building and Knowledge Sharing• Policy measures

Strategic Dimensions - 5 Energy Corridors• Cooperation opportunities within Central Asia, Central

Asia-PRC, Central Asia-South Asia, Central-Asia-Russia, & Central Asia-EU

Azerbaijan

Uzbekistan

Kazakhstan

Turkmenistan

Electricity

Electricity

Oil and Gas

Tajikistan

Kyrgyzstan

Strategic Dimensions

Coal

Coal

Afghanistan

PRC

31

Energy Sector Action Plan (2010-2013)

Regional

Institutions

Energy Sector Coordinating

Committee (ESCC)

Regional power dispatch center

(CDC)

Rich Energy

Resources

Oil, Gas, Water, Wind, Coal

Extensive reserves and

renewables

Diversity of resources

Uneven distribution across

countries

Export

Opportunities

South Asia

China

EU

Russia

Energy Water Linkages

CAREC

Energy security and efficiency, affordability

RES

OU

RC

ES

AC

TIO

NS

RES

ULT

S

Priority:

- Central Asia

- Electricity

Energy Demand/

Supply Balance

and Infrastructure

Regional Dispatch

and Regulatory Development

Approved October 2009

• Action Plan Objective

To promote regional trade by optimizing integrated transmission and generation expansion

• Why?

Uneven energy demand/supply balance

Infrastructure constraints (generation, transmission, distribution)

• How

Investment: Promote infrastructure investment

Capacity development & knowledge sharing:

Conduct thematic capacity development program

Policy measures:

Develop Regional Power Master Plan for 4 Central Asian countries + Afghanistan based on a diagnostic study

• Progress

Several investment projects completed and on going

Diagnostic study completed in 2010

Regional Master Plan to be delivered for the 10th

CAREC MC

Pillar 1: Energy Demand/Supply Balance

and Infrastructure Constraints

32

33

Ongoing

ProposedAfghanistan

Tajikistan

Regional Power

Transmission

• Action Plan Objective

To maximize the benefits of unified operation of the Central Asia Power System

• Why?

Substantial decline in regional energy trade

Ensure reliable power supply

Enable optimal utilization through balanced dispatch and regulatory

• How?

Investment: Phase investments based on diagnostic study

Capacity development & knowledge sharing:

Strengthen CDC and national load dispatch centers and support for regulators

Policy measures:

Develop an institutional platform and framework for regional power trade

• Progress

Diagnostic study completed in 2010

Next steps to be identified by the ESCC

Pillar 2: Regional Dispatch and Regulatory Development

34

• Action Plan Objective

To Strengthen cooperation by integrating energy and water analysis

• Why?

Transboundary water management

Need for integrating energy and water analysis

• How

Investment: Identify consensus projects to improve the rational and effective use of energy and water

Capacity development & knowledge sharing:

Enhance integrated energy-water models, analytical tools, and shared databases

Policy measures:

Strengthen Central Asian institutions to lead the dialogue and analysis on rational use of energy-water resources

• Progress

Initial consultations have been done in 2010

Detailed TORs for energy-water analytical and institutional framework to be developed in 2011

Pillar 3: Energy-Water Linkages

35

• Proceed to next steps in work plan

− Complete Regional Power Sector Master Plan (Pillar 1)

− Identify priority activities in coordination with USAID and implement short term actions

(Pillar 2)

− Prepare detailed terms of reference for energy-water analytical and institutional

frameworks (Pillar 3)

• Develop the rolling project pipeline

• Conduct Capacity Building Program

• Action plans focusing on other energy corridors to be considered in the

medium term

• Nominate and confirm alternate Focal Points

Future Directions

36

Other Initiatives

37

Trade Policy Strategic Action Plan

(TPSAP)

• Strategic goals

− More open economies

− WTO membership for all countries

− Capacity development and knowledge transfer of trade and trade policy issues

• Operational strategy

− Broad-based reduction in trade barriers, increased transparency, and simplification of

trade regulations

− Provide practical assistance to non-WTO members to build capacity and transfer

knowledge

− Capacity building and knowledge transfer activities

38

Key Achievements in 2010• WTO accession training

−Seminars by countries

−Seminars by World Bank

−Analytical note

• Monitoring TPSAP implementation

−Questionnaire formulated

−Some progress but more efforts needed:

▪ Simplification of trade tax regime

▪ Reduction of tariffs

−Trade Liberalization Index 2009: most 2010 targets met

• Institutional impediments to trade

−Analytical study completed

−Recommendations:

▪ Simplify procedures for import and export

▪ Improve general business environment

▪ Deepen financial system

−Next steps:

▪ Countries’ specific agendas to be monitored by TPCC

39

Future Directions

• WTO accession

− Impact of trade agreements and customs union

− Knowledge sharing training program

− Round Table on progress and impediments at next TPCC meeting

• Monitoring TPSAP implementation

− Submit responses by end-February 2011

− Trade Liberalization Index for 2010

• Institutional impediments to trade

− Country-specific plans by end-February 2011

40

CAREC Institute (CI)

• Mission

− Enhance the quality of regional cooperation by generating world-class knowledge

resources in the priority areas of transport and trade facilitation, energy and trade

policy.

• Structure

− Initially “virtual”

• Main outputs

− Professional development and training

− Research program

− Outreach program

− CAREC Program Results Framework

41

CI Progress Report• Key Developments:

Capacity Building: Leadership Dev’t Initiative (LDI); training/knowledge sharing for priority and Tier 2 sectors

Research: sector studies; research programs; issue-specific studies

Outreach: website; seminars

• Work plan for late 2010 - 2011: CAREC 10-Year Commemorative Study (Part

2) Preparation of CI work plan for 2012-2014,

etc

• Align with priority sectors’ needs, themes and projects

• Focus on in-depth and practical training • Adopt guidelines/mechanisms for

research programs: selection of participants; peer/external review etc.

• Target audience-message interface to communicate CAREC themes more effectively

CI Performance Assessment Review: Activity-level

Recommendations

• Strengthen interface between CI, sector coordinating committees and in-country teams

• Strengthen interface with other partner multilateral and local institutions

• Enhance CAREC Secretariat functions• Adopt quick response mechanisms• Institutionalize post-program evaluation

CI Performance Assessment Review: Broader-level

Recommendations

CAREC Program in 2010-2011

45

Achievements in 2010

• Sector-related progress (mentioned earlier)

• Completed part 1 of 10-year commemorative study – 10 year stock-take of

CAREC’s progress

• Completed first Development Effectiveness Review

• Planned and agreed on 10-year anniversary activities

• Organized SOMs and 9th

MC

• Convened first-ever CAREC Ministerial Retreat

46

2011 CAREC Deliverables

• Part 2 of 10-year commemorative study (“CAREC 2020”)

• Development Partners’ Meeting (DPM)

• CAREC video

• Signing of agreements

• SOMs and 10th

MC

• Sector Committee Meetings

• External relations plan

• Results framework and Development Effectiveness Review

47

CAREC 2020

• Strategic framework for CAREC for 2011-2020

• Vision and goal same as the Comprehensive Action Plan

o Good neighbors, good partners, good prospects

o Development through economic cooperation

• Focus on implementing projects in priority sectors

• Develop a medium-term rolling pipeline

• Strengthen country ownership and institutional arrangements

• Mobilize increased resources

• Monitor results

48

Indicative Calendar of Core Activities Activity Indicative Date(s)

Energy Sector Coordinating Committee (ESCC) Subcommittee Meetings

March-April 2011

Third Executive Leadership Development Program under CAREC Institute

28 March-2 April 2011

1st Subregional Workshop (Azerbaijan, Afghanistan, Turkmenistan, Uzbekistan)

19-20 April 2011

2nd Subregional Workshop (Kazakhstan, Kyrgyz Republic, Tajikistan) 25-26 April 2011

Transport Sector Coordinating Committee (TSCC) Meeting 27-28 April 2011

ESCC Meeting 10-12 May 2011

3rd Subregional Workshop (PRC, Mongolia, Pakistan) 17-18 May 2011

Trade Policy Coordinating Committee (TPCC) Meeting 7-8 June 2011

Midterm Senior Officials’ Meeting (SOM) 7-8 June 2011

Meetings of TSCC, ESCC, and/or CCC August-September 2011

Consultations with MI partners and other development partners on the Development Partners’ Meeting

June-October 2011

10th CAREC Ministerial Conference and 10-year Commemorative Activities

Early November 2011

49